European Bank’s Rate Cuts Push the Markets Upward

By The Associated Press

June 5, 2014

New steps by the European Central Bank to revive the euro zone’s flagging economy gave markets a lift on Thursday.

On Wall Street, the gains were broad, pushing the Standard & Poor’s 500-stock index and the Dow Jones industrial average to new nominal highs. All 10 sectors in the S.&P. 500 crept higher, led by industrial companies and banks.

The European Central Bank cut two crucial interest rates, pushing one below zero. The unusual move means that it will charge banks to hold their money, instead of paying them interest. The goal is to arm-twist banks into lending money rather than stockpiling it.

Mario Draghi, the E.C.B.’s president, said the bank was willing to take more steps to support the region’s economy if needed, including buying bonds.

“It’s a big step by Draghi,” said Jason Pride, director of investment strategy at Glenmede Trust. “I would say it’s a big thing even though the markets may have expected it.”

The S.&P. 500 index rose 12.58 points, or 0.7 percent, to close at 1,940.46. The Dow Jones industrial average rose 98.58 points, or 0.6 percent, to 16,836.11.

In Europe, Germany’s main stock index, the DAX, touched a record high before pulling back and ending the day with a gain of 0.2 percent. France’s CAC 40 surged 1.1 percent.

“The world looks to be a safer place today,” said Chris Rupkey, chief financial economist at the Bank of Tokyo-Mitsubishi in New York, in a note to clients. “If you lend money out, the E.C.B. has money for you.”

Wall Street’s attention now turns to the May employment report on Friday. Economists estimate that employers added 220,000 jobs in May and that the unemployment rate inched up to 6.4 percent from 6.3 percent as more people hunted for work.

Among stocks on the move, PVH, the company behind the Calvin Klein and Tommy Hilfiger brands, sank $10.59, or 8 percent, to $120.09, after it cut its profit forecast, blaming the global economy and a harsh winter for weaker sales. PVH’s stock was the biggest percentage loser in the S.&P. 500.

Joy Global, a maker of mining equipment, gained $3.85, or 7 percent, to $61.70, after it reported financial results that exceeded analysts’ expectations, even though its quarterly profits and sales dropped as coal miners scaled back operations. Joy Global’s stock was the biggest gainer in the S.&P. 500.

In the government bond market, the yield on the 10-year Treasury fell to 2.58 percent from 2.61 percent late Wednesday, while its price rose 6/32, to 99 9/32.

A version of this article appears in print on , Section B, Page 8 of the New York edition with the headline: European Bank’s Rate Cuts Push the Markets Upward. Order Reprints | Today’s Paper | Subscribe